Case Study - Kapote Outerwear Kapote has you protected for a lifetime! Kapote Outerwear is an independent Canadian business that has been operating since 1970, and offers lifetime guarantees on all their products. The owners of Kapote are proud that as a small- to medium-sized operation that they are manufacturers of coats (long-, mid-, and short-length with down or synthetic interiors) and accessories (hats, scarves, mittens, and bags) for both men and women that have been created by their Craft Workers who have sought inspiration from the arduous Canadian climate to create outerwear that protects against the unpredictable and harsh weather conditions of western Canada. Production takes place in a small workshop factory in the small hamlet of Lac La Biche, in northern Alberta, the company has annual sales of about $11 million, mostly in the Western provinces. The owners are twin siblings Beverly Papineau and Theoren Papineau and both Bev and Theo as they are commonly known, are firm believers in making a high-quality product that will endure many years of use and deliver flawless quality and durability. Therefore, they only use superior materials, from thread to insulation, and their rigorous quality control is applied to every single garment. Of course, this has led to high production costs and high prices. Although they are equal owners of Kapote, Theo leaves the running of the business to Bev as he concentrates only on the making of the products as he simply enjoys crafting away in the workshop factory. On the other hand, the other Papineau twin, Bev believes in a high level of customer service and is willing to make the products to customers specifications whenever there is a special request. However, this often frustrates Theo and the other production staff because the equipment must be reset for relatively short production runs of customized products that takes considerable extra time and, of course, also drives up Kapotes production costs. Kapotes workshop factory employs about 75 people, most of whom work in production as Craft Workers. There are a few supervisors known as Head Artisans to oversee production, but their responsibilities are not clearly spelled out, so the Head Artisans often contradict one another. Although Theo has been asked several times by Bev to be a Head Artisan, he is quite happy with simply being a Craft Worker. Also, there is no system for scheduling production; in fact, there are few systems of any kind. Whenever there is a problem, everyone knows that they must go to Bev if they expect a definite answer. Kapote has partnerships with several retailers throughout the Western region; most of these partnerships were established by Bev herself. The organization has one bookkeeper to keep records and issue the pay cheques, and several office employees to handle routine administrative chores. Kapote has no staff dedicated to the following business functions: accounting, marketing, human resources, or production. B.

1. Case Study - Kapote Outerwear
Kapote has you protected for a lifetime!
Kapote Outerwear is an independent Canadian business that has been operating since 1970, and
offers lifetime guarantees on all their products. The owners of Kapote are proud that as a small-
to medium-sized operation that they are manufacturers of coats (long-, mid-, and short-length
with down or synthetic interiors) and accessories (hats, scarves, mittens, and bags) for both men
and women that have been created by their Craft Workers who have sought inspiration from the
arduous Canadian climate to create outerwear that protects against the unpredictable and harsh
weather conditions of western Canada. Production takes place in a small workshop factory in the
small hamlet of Lac La Biche, in northern Alberta, the company has annual sales of about $11
million, mostly in the Western provinces.
The owners are twin siblings Beverly Papineau and Theoren Papineau and both Bev and Theo as
they are commonly known, are firm believers in making a high-quality product that will endure
many years of use and deliver flawless quality and durability. Therefore, they only use superior
materials, from thread to insulation, and their rigorous quality control is applied to every single
garment. Of course, this has led to high production costs and high prices. Although they are
equal owners of Kapote, Theo leaves the running of the business to Bev as he concentrates only
on the making of the products as he simply enjoys crafting away in the workshop factory. On the
other hand, the other Papineau twin, Bev believes in a high level of customer service and is
willing to make the products to customers specifications whenever there is a special request.
However, this often frustrates Theo and the other production staff because the equipment must
be reset for relatively short production runs of customized products that takes considerable extra
time and, of course, also drives up Kapotes production costs.
Kapotes workshop factory employs about 75 people, most of whom work in production as Craft
Workers. There are a few supervisors known as Head Artisans to oversee production, but their
responsibilities are not clearly spelled out, so the Head Artisans often contradict one another.
Although Theo has been asked several times by Bev to be a Head Artisan, he is quite happy with
simply being a Craft Worker. Also, there is no system for scheduling production; in fact, there
are few systems of any kind. Whenever there is a problem, everyone knows that they must go to
Bev if they expect a definite answer.
Kapote has partnerships with several retailers throughout the Western region; most of these
partnerships were established by Bev herself. The organization has one bookkeeper to keep
records and issue the pay cheques, and several office employees to handle routine administrative
chores. Kapote has no staff dedicated to the following business functions: accounting, marketing,
human resources, or production. Bev solely handles these areas, although she has no real training

2. and little interest in any of them except for of course production. Her focus is often on ensuring
product quality and on dealing with the countless problems that everyone brings to her every
day. Bev can be often heard exclaiming to anyone that will listen, in her usual good-natured way,
Am I the only the one who can make decisions around this place? as she deals with each of these
problems.
When the twins were growing up, their familys foray into quality outerwear began with their
father Rene Papineau looking to develop technology that could brave Canada's harsh climate and
Rene quickly became a local legend in their hamlet. As a young man starting out, the senior
Papineau meticulously crafted coats that quickly gained in popularity to become the gear of
choice for Canada's long winters. With a solid reputation, Renes one-man workshop grew and
eventually his twins took over his growing business. As children Bev and Theo watched their
father Rene toil for hours in his workshop to scrape out a living for his family. Long ago both
siblings decided they wanted to be the type of employer that shows their employees
consideration and compassion for their hard work. Although Bev feels that the organization
cannot afford any formal employee benefits, she would often keep sick workers on payroll for a
considerable amount of time, especially if she knew that the worker has a family to support. As a
leader Bev is well liked by most employees, who have shown little interest in unionization
during the few approaches made by union organizers.
At Kapote there is no formal system for pay and pay decisions tend to be made on the spur of
the moment, therefore almost everybody has a different pay rate. Bev has never gotten around to
giving annual raises, so any employee who wants a raise knows to approach Bev because she
gives raises to most people who approach her, but the amount depends on her mood at the time
and on how well she knows the employee. For example, if Kapote has just lost a major customer,
raises are lower, and if the organization has just booked a large order, they are higher. They are
also higher if she knows the employee has a family to support, or if the employees spouse has
been laid off, or if the employee has added a new member to the family.
Bev believes that a good employer should recognize the contributions made by employees during
the year. As a result, at the end of each year - if profits allow - she gives merit bonuses to
employees, which she says are based on their contributions to Kapote. As she does every year, in
late November she picks a day to sit down with her employee list, in alphabetical order, and
pencil in an amount next to each name.
Everybody gets something, but the amounts vary greatly. If she can associate a face with the
name (which is difficult sometimes because of high employee turnover), she tends to give larger
bonuses. And if she can remember something such as a cheerful attitude, the bonuses are higher
still. But if she remembers anyone complaining about that employee (she usually cannot recall
the exact reasons), the employee gets a smaller bonus. Not surprisingly, longer-term employees

3. tend to receive much higher bonuses than new employees. She has noticed this tendency but
assumes that if an employee has been with the firm longer, that person must be more productive,
so this is fair. She personally distributes the bonus cheques on the last working day before
Christmas.
Because she just turned 63, Bev is planning to retire in the next year or two while Theo will stay
on working at Kapote in production still as a Craft Worker. Bev and Theo are turning the
business over to his son, Luc Papineau, who is just finishing his MBA at Lethbridge University.
Ironically, just a few days before Lucs graduation, the bookkeeper informed Bev that there was
not enough money in the company bank account to meet payroll!
QUESTION
Address the following information in your Part 2 Report:
Define the required behaviour your client needs from its employees and the role compensation
will play in getting that behaviour (12 marks) (Note: this is a key first step in formulating the
compensation strategy).
while answering this part, please keep the following in mind:
Key employee behaviours (i.e., task, membership, citizenship)
Explain what the role of compensation will be at Kapote (i.e., list/identify the key points) in
producing these behaviours identified.
TIP: For this section I recommended you reference the Role of Compensation and
Intrinsic/Extrinsic Rewards in Producing Behaviour for Different Organizations (Table 6.1). If
using this table, set it up as shown in the textbook and put it in the appendix of your report (this
will help keep your work organized). Remember to explain your rationale in the body of your
report.